Critics question city on 'affordable' apartments

By JENNIFER LANGSTON, P-I REPORTER

Published 10:00 pm, Monday, May 15, 2006

A City Council committee tabled a request Tuesday for a $1.5 million property tax break from a University District developer willing to provide three-dozen "affordable" apartments whose rents range from $914 to $1,112 a month.

Those rentals would technically be affordable to someone making 70 percent of Seattle's median income, which qualifies the project for a 10-year property tax exemption program approved by the City Council two years ago.

Since that time, seven developments have applied for or received the affordable-housing tax break, including projects built by non-profits and billionaire Paul Allen's Vulcan real estate company that is remaking South Lake Union.

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Affordable one-bedroom apartments produced by the program have rented from $700 to $1,022, according to city figures.

City Council member Sally Clark said she feared the argument that the subsidy produces cheaper housing might not pass the "red face test" in certain circumstances, particularly when it comes to studios.

Council member Tom Rasmussen asked city staff to explore whether the developer of the Lothlorien Apartments at 4730 University Way N.E. might agree to include a smaller number of subsidized apartments aimed at people making less money.

Developer Tom Ferguson, who is planning a new, 125-apartment building with retail shops and offices next to the historic Wilsonian Apartments, said he'd be willing to talk to the city about that possibility.

But given the market he's targeting -- junior professors, graduate students and those who work at the university -- rents affordable to those making 70 percent of median income, or $38,150, made the most sense.

Critics have argued the city program offering tax breaks to developers who charge such high rents doesn't provide much public benefit. The council two years ago extended the property tax exemption to 17 neighborhoods where it wants to encourage more housing.

"You could make the argument that we need these tax breaks to simulate growth in areas that it's not occurring, but construction cranes are going up like beanstalks," said John Fox, an affordable-housing advocate for the Seattle Displacement Coalition.

He said apartment data and a quick search on craigslist.org showed plenty of studio apartments in the U-District renting for $570 a month and one-bedrooms averaging $750. That's hundreds of dollars less than "affordable" apartments that taxpayers are subsidizing, he said.

Seattle Office of Housing officials said one-bedrooms in newer U-district apartment buildings range from $990 to $1,200. "Affordable" one-bedrooms at the Lothlorian would be capped at $954.

City officials concede that that rents for subsidized studios may not be much lower than what developers are already building with no financial incentives. The price gap between subsidized and market rents widens for one- and two-bedrooms and is likely to grow larger as rents begin to climb after being depressed for several years, they say.

"We're trying to set the price now 5so that as apartments become more scarce and rents go up, people aren't displaced, and we have some assurance that these will remain affordable," Rasmussen said. "In a sense it's an investment in the future."

Still, Rasmussen said he would like to explore giving the city's housing office more authority to negotiate with developers seeking tax breaks to determine what income levels their affordable housing should target. Currently, developers are allowed to choose among several options up to 70 percent of median income.